Russian President Vladimir Putin
Russia is set to raise its value-added tax (VAT) as part of efforts to sustain its ongoing military campaign in Ukraine, the country’s Finance Ministry announced on Wednesday.
According to the draft 2026 budget, the standard VAT rate will rise from 20% to 22%, marking a significant shift in fiscal policy aimed at financing rising defense costs.
While the government has pledged to maintain all current social programs, it identified defense, internal security, and support for military personnel and their families as top “strategic priorities.”
Government data indicates that military and security-related expenses will make up roughly 40% of all spending in the 2025 federal budget.
Massive state contracts for weapons production and increased payments to troops and their families have helped drive growth in what’s now widely described as a “war economy.”
However, the strain on Russia’s civilian sectors is becoming more evident. Inflation continues to erode household purchasing power, raising concerns about the broader economic impact.
The Finance Ministry emphasized that the reduced 10% VAT rate—applicable to essential goods such as food, medicine, and children’s items—will remain unchanged.
Russia’s full-scale invasion of Ukraine, ordered by President Vladimir Putin, has stretched into its fourth year with no clear end in sight.
The prolonged conflict continues to shape both domestic policy and economic priorities.
The proposed budget still requires approval from parliament—a step that, in Russia’s political system, is largely seen as procedural.
(dpa/NAN)
